Market frameworkDefinition of ‘renewable energy’
Is there any legal definition of what constitutes ‘renewable energy’ or ‘clean power’ (or their equivalents) in your jurisdiction?
Legislative Decree No. 28 of 3 March 2011, implementing in Italy European Directive No. 2009/28/EC on the promotion of renewable energy (the Renewable Energy Directive), defined ‘renewable energy’ as the energy produced by non-fossil energy sources (ie, wind, solar, aerothermal, geothermal, hydrothermal and oceanic energy, hydropower, biomass, landfill gas, waste gas from purification processes and biogas).Framework
What is the legal and regulatory framework applicable to developing, financing, operating and selling power and ‘environmental attributes’ from renewable energy projects?
The general principles governing authorisation procedures for the development, commissioning and operation of renewable energy projects are set out under national law, although each region may adopt regional laws regulating specific procedures within the national framework.
- According to National Decree No. 387/2003, which implemented EU Directive No. 2001/77/EC, renewable energy projects are subject to the single authorisation (the AU) granted by the relevant region or, if applicable, by the provinces which have been delegated by the regions. The AU is issued based on a simplified procedure in which all public entities involved shall participate, and it includes all relevant authorisations and clearances required for the building and the operation of the relevant renewable energy plant. The single authorisation covers not only the construction and operation of the plant but also the construction and operation of the relevant interconnection facilities.
- According to article 27 bis of Legislative Decree No. 152 of 3 April 2006, renewable energy plants are subjected to the 'PAUR procedure', when an environmental impact assessment and a single authorisation procedure are both required. The said procedure takes place through the 'conference of services', in which all public entities involved shall participate. Following successful completion of such procedure, the regional authority (or the public authorities delegated by the latter; eg, provinces) then issues the authorisation, called PAUR, which is comprehensive of any required authorisations, licences, permits, clearances and nihil obstat necessary, necessary to build and operate the specific PV plant.
- According to the Ministerial Decree dated 10 September 2010 and to Legislative Decree No. 28/2011, renewable energy plants with a power lower than specific thresholds (ie, solar plants under 50kW; wind plants under 60kW; and hydroelectric plant under 100kW) are exempt from the single authorisation requirement and benefit from a simplified procedure (the PAS procedure). Legislative Decree No. 28/2011, however, allows each region to increase the generating capacity cap within which the construction and operation of plants fuelled by renewable sources may be authorised through a PAS procedure up to 1MW. Moreover, according to Law Decree No. 17 of 1 March 2022 (Energy Decree), as converted into law by Law No. 34 of 27 April 2022, the PAS authorisation procedure has been extended to the following types of plant:
- PV plants with a power capacity up to 20MW and the relevant interconnection facilities connected to the grid in high and medium voltage located in industrial, productive or commercial areas as well as in landfills or closed landfill lots not available for further exploitation;
- PV plants with a power capacity up to 10MW located in suitable areas as identified pursuant to article 20 of Legislative Decree No. 199 of 8 November 2021;
- agrovoltaic plants implementing innovative integrative solutions with the assembly of modules elevated from the ground with the possibility of rotation, located no more than 3km away from areas of industrial, artisanal and commercial use; and
- floating PV plants with a power capacity up to 10MW, installed on the water surface of reservoirs and water basins, including disused quarries or irrigation canals.
- The works related to small installations that have a minor impact on the surrounding environment may be carried out in a deregulated regime by filing with the competent municipality a notice of the start date of the works along with a detailed report of the designed plant.
From an environmental perspective, renewable plants with a generating power above certain thresholds are subject to an environmental pre-screening procedure. When the pre-screening procedure has a negative outcome, the project must undergo a full environmental impact assessment procedure. Furthermore, projects to be built within certain areas of significant landscape and environmental value must undergo an additional assessment, the ‘environmental incidence assessment’, in order to evaluate the impact that the project may have on the flora and the fauna living within that area.
Moreover, according to the Unified Text for Active Connections, issued in 2008 by ARERA and containing the rules applicable to high, medium and low voltage connections to the power grid, the renewable energy plants take priority over plants fuelled by traditional energy sources as regards the connection to the electricity grid. Also, regarding the dispatching phase, starting from 1 January 2020, pursuant to the EU Regulation on the internal market for electricity No. 2019/943, renewable energy has a right of priority over other energy sale offers at the same price if: (1) the generating installations are already benefiting from priority dispatch; (2) the electricity is generated in power-generating facilities using high-efficiency cogeneration with an installed electricity capacity of less than 400kW; and (3) for power-generating facilities commissioned as from 1 January 2026, the power-generating facilities use renewable energy sources and have an installed electricity capacity of less than 200kW.
As regards ‘environmental attributes’, the Decree of MISE dated 31 July 2009 on 'criteria and procedures for providing customers with information about the fuel mix used to generate the electricity supplied, as well as on its environmental impact', introduced in Italy the Guarantee of Origin (GO) certificates. These certificates, whose aim is to give the final customers proof of the share of renewable energy in the fuel mix sold by a given energy supplier, may be traded according to the procedures set out by the GSE.Government incentives
Does the government offer incentives to promote the development of renewable energy projects? In addition, has the government established policies that also promote renewable energy?
The Italian government has introduced a number of incentive schemes to support power generation from renewable energy sources.
Legislative Decree No. 199
Currently, in Italy, the incentive regime for RES plants is regulated by the new Legislative Decree No. 199 of 8 November 2021, effective since 15 December 2021 (Decree No. 199). This Decree, which implemented Directive (EU) No. 2018/2001 (the 'RED II Directive') on the promotion of the use of energy produced from renewable energy sources (RES), is a follow-up to the decree of the Italian Minister of Economic Development dated 4 July 2019 (FER I Decree) that regulated the previous incentive scheme for renewable energy projects for the three-year period 2019–2021 and which is now no longer effective, save for what is reported below.
It is worth noting that Decree No. 199 is a programmatic document which gives, however, a general overview of the incentive mechanisms that will apply to RES projects in the forthcoming years. Indeed, according to articles 6 and 7 of Decree No. 199, within 180 days of its entry into force of (ie, 180 days from 15 December 2021), the Ministry for Ecological Transition was expected to adopt specific decrees implementing new incentive schemes for renewable energy projects ('implementing decrees').
Until the implementing decrees enter into force (to date, they have not been issued), an interim regime is being applied in order to facilitate the transition from the incentive scheme provided by the FER I Decree to the new support schemes that will be regulated once the above-mentioned implementing decrees have been enacted.
In this respect, article 9 of Decree No. 199 provides that, during the interim period, the GSE must organise new procedures for the awarding of incentives by making available to renewable energy operators all the residual power capacity not allocated under the FER I Decree.
The GSE also clarified that these new procedures will continue to be subject to the same procedural rules set out in the FER I Decree.
FER 1 Decree feed-in-tariffs
On 4 July 2019, the FER 1 Decree was implemented by the Italian Minister of Economic Development. The FER 1 Decree provided for specific incentives for the three-year period 2019–2021 in line with the previous Ministerial Decree of 23 June 2016 (which regulated the last incentive scheme for RES projects other than PV projects) confirming several provisions included therein. According to the FER 1 Decree, RES projects had access to incentives through registration with specific registers managed by the GSE or, depending on the size of the project, through auctions organised and managed by the GSE.'All-inclusive' feed-in-tariff
According to the FER 1 Decree, RES projects with a power capacity not exceeding 250kW could opt for the all-inclusive feed-in-tariff, which includes both the incentive component and the value of electricity fed into the grid.Green certificates
Another incentive scheme to promote and increase the use of renewable energy sources in electricity production is the ‘green certificates’ mechanism. In 1999, the Italian government introduced an annual obligation for electricity producers to feed into the grid a minimum quota of energy produced using renewable energy sources. The energy producer could either produce the entire minimum quantity of energy from renewable sources by itself or purchase the whole or part of it from other producers. Starting from 1 January 2016, green certificates have been replaced by a feed-in premium mechanism known as GRIN, whereby the producers who owned green certificates – in addition to the revenues deriving from the sale of the electricity – are entitled to receive an additional tariff on the net renewable energy produced from the GSE.White certificates
According to an incentive scheme dating back to 2005, white certificates are negotiable titles that certify the achievement of energy savings through works and projects aimed at increasing energy efficiency. A certificate is equivalent to the saving of one Ton Oil Equivalent. White certificates may be traded on a market platform managed by the GME or via bilateral negotiation.
Are renewable energy policies and incentives generally established at the national level, or are they established by states or other political subdivisions?
The renewable energy policies regarding authorisation procedures and incentives are established at the national level as they fall in the Ministry of Economic Development competence. However, the definition of some rules and procedures is delegated to regions and provinces that may adopt local laws within the limits imposed by the national law.Legislative proposals
Describe any notable pending or anticipated legislative proposals regarding renewable energy in your jurisdiction.
The 2017 National Energy Strategy, the 10-year plan approved by the Italian government to manage the change of the national energy system in accordance with the principles set out in the European Clean Energy Package, has established several priority goals to be implemented by 2030. Among others, the main goals are:
- enhancing Italy’s competitiveness, by continuing to bridge the gap between Italian and European energy prices and costs, in a global context of rising energy prices;
- attaining Europe’s environmental and decarbonisation targets by 2030 in a sustainable way and in line with the future targets set by the United Nations Climate Change Conference held in 2015 (also known as the Paris Climate Conference);
- continuing to improve the security of energy supply and the flexibility of energy systems and infrastructures; and
- decreasing primary consumption of oil products by 13.5 million tonnes of oil equivalent by 2030 and doubling investments in clean-energy research and development, from €222 million in 2013 to €444 million in 2021.
Describe the legal framework applicable to disputes between renewable power market participants, related to pricing or otherwise.
The disputes relating to the public authorities’ decisions are settled by the Italian administrative courts.
More specifically, decisions concerning administrative authorisations and building permits, as well as the measures adopted by the GSE concerning the public incentives, may be challenged, within specific time frames, before the competent regional administrative court or before the Italian president.
The energy supply and dispatching agreements executed between producers and Terna normally provide for the Court of Rome (where Terna is domiciled) for any dispute relating to the validity, interpretation and application thereof.